Description

SEBI imposes penalty on Chinmay P Vora for executing non-genuine reversal trades in illiquid stock options on BSE during April 2014 to September 2015, creating artificial volumes.

Summary

SEBI issued an adjudication order (Order/JS/VC/2025-26/31728) against Chinmay P Vora (PAN: AGAPV3871C) for executing non-genuine reversal trades in illiquid stock options on BSE during the investigation period from April 1, 2014 to September 30, 2015. The trader was found to be one of 14,720 entities involved in creating artificial trading volumes through manipulative reversal trades, which constituted 81.41% of all trades in BSE’s stock options segment during this period.

Key Points

  • Chinmay P Vora charged with violating PFUTP Regulations 3(a), (b), (c), (d), 4(1) and 4(2)(a)
  • Investigation revealed 2,91,744 reversal trades comprising 81.41% of all stock options trades on BSE during the investigation period
  • Reversal trades involved entities reversing their buy/sell positions in contracts with the same counterparty
  • Trades deemed non-genuine, lacking basic trading rationale and creating false appearance of trading activity
  • Total of 14,720 entities found executing non-genuine trades in BSE stock options segment
  • Show Cause Notice issued on August 31, 2021
  • Adjudicating Officer appointed on April 03, 2025 under Section 15-I of SEBI Act

Regulatory Changes

No new regulatory changes introduced. This is an enforcement action under existing SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.

Compliance Requirements

This order serves as a precedent for market participants to:

  • Avoid executing reversal trades that lack genuine trading rationale
  • Refrain from creating artificial volumes in illiquid stock options
  • Ensure all trading activities have legitimate economic purpose
  • Maintain compliance with PFUTP Regulations in derivatives trading

Important Dates

  • Investigation Period: April 1, 2014 to September 30, 2015
  • Show Cause Notice: August 31, 2021
  • Adjudicating Officer Appointment: April 03, 2025
  • Order Date: October 16, 2025

Impact Assessment

Market Impact: Low - Individual enforcement action with limited broader market implications

Operational Impact: This order demonstrates SEBI’s continued focus on detecting and penalizing manipulative trading practices in illiquid derivatives segments. The widespread nature of such practices during 2014-2015 (involving over 14,700 entities) led to systematic enforcement actions. Market participants should note that even historical trading irregularities can result in adjudication proceedings years later.

Precedent Value: Reinforces that reversal trades creating artificial volumes without genuine trading rationale will be treated as manipulative and deceptive practices under PFUTP Regulations.

Impact Justification

Individual adjudication order against one trader for past violations (2014-2015). High severity due to market manipulation findings, but low impact as it affects only one entity and relates to historical trading activity.